b. Nginx

Nginx is configured as an HTTP reverse proxy using an upstream block that defines the pool of backend servers. When Docker Compose starts multiple replicas of the gateway service, Docker's internal DNS resolves the service name gateway to all replica IP addresses. Nginx queries that DNS record at startup and builds its upstream pool from every returned address.

Create the file setup/nginx/nginx.conf:

nginx.conf
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http {

    upstream gateways {
        server gateway:8080;
    }

    server {
        listen 80;

        location / {
            proxy_pass         http://gateways;
            proxy_set_header   Host              $host;
            proxy_set_header   X-Real-IP         $remote_addr;
            proxy_set_header   X-Forwarded-For   $proxy_add_x_forwarded_for;
            proxy_set_header   X-Forwarded-Proto $scheme;
        }
    }
}

Key directives:

Directive Purpose
upstream gateways Names a pool of backend servers. Docker DNS expands gateway:8080 to all replica IPs at startup.
least_conn Load balancing algorithm: each new request goes to the replica with the fewest active connections.
proxy_pass Forwards the matched request to the upstream pool.
X-Real-IP Passes the original client IP address to the backend service.
X-Forwarded-For Appends the client IP to the standard forwarding chain — used for logging and audit trails.
X-Forwarded-Proto Tells the backend whether the original request arrived via HTTP or HTTPS.

Changing the algorithm

The algorithm is declared inside the upstream block. Replace least_conn with any of the following:

Directive Algorithm
(none) Round Robin (default)
least_conn; Least Connections
ip_hash; IP Hash (sticky sessions)
random; Random

Weighted Round Robin uses per-server weight parameters: server gateway:8080 weight=3;

DNS resolution and dynamic scaling

Nginx resolves the gateway hostname once at startup and caches the returned IP list. Starting the stack with a fixed replica count (defined in compose.yaml) ensures Nginx picks up all instances on launch. If replicas are added later, Nginx must be reloaded to discover them:

docker compose exec nginx nginx -s reload

The resulting project structure after adding the configuration file:

📁 api/
├── 📁 setup/
│   └── 📁 nginx/
│       └──  nginx.conf
├── 📁 account-service/
├── 📁 auth-service/
├── 📁 gateway-service/
├──  compose.yaml
└──  .env